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Charts I’m Watching: Aug 29, 2013

SPX finished the day very close to our initial target for the corrective wave, the bottom of the red channel and the .500 Fib at 1634.28. Importantly, it closed within the large purple channel.

I’ll look for an opportunity to go long this morning, probably at 1628-1632.

The futures are off slightly, so there’s a very good chance SPX will complete the little Bat Pattern it has started to the .886 at 1628.96.

The eminis are back within their purple channel as well, and could be done with the correction after tagging the .786 at 1627 or .886 at 1626. However, I can’t rule out a small Crab Pattern intra-day to intersect with the purple .618 at 1611.37.

The dollar broke out of its channel, completing its IH&S and running up to tag its .618. It just backtested its neckline.

If the fear trade and/or the emerging market debacle continue, it should be making a major reversal here at the bottom of the red channel. But, there’s clearly resistance to be overcome.

UPDATE: 9:33 AM

Going long here at 1632, stops at 1627ish.

UPDATE: 11:22 AM

Potential resistance here at 1646, the red .786 and top of a possible new rising channel. Note there’s a gap to fill at 1656. The .707 at 1657.19 looks like a good short-term target.

UPDATE: 12:33 PM

Getting some weakness off that resistance. I’ll play the downside for possibly 1636 or more. Stops at 1647.

UPDATE: 2:29 PM

The market has seemingly nodded off… I have to duck into a meeting for the next 1-2 hours, but here’s my expectation:

SPX continues to follow the tiny white channel to the .500 or (more likely) .618 at 1636.81, at which point it should reverse and move higher. I would take profits there and switch long, but with stops at 1635 in case it goes on to tag the .886 or (more likely) the .786.

If it reverses by 1630 or breaks out of the white channel, I’d be long — looking for 1638+. Any dip below 1627 is likely headed for 1621.